* Cargill customers request beef without filler meat
* Cargill will scale back filler beef production
* Governors to tour beef plant
* Prices of cattle futures tumble
CHICAGO, March 28 (Reuters) - Agribusiness giant Cargill Inc said on Wednesday that it has reduced production of a beef filler, called "pink slime" by critics, that is used in hamburgers in the wake of its customers eliminating it from their products.
The move by Cargill, a major U.S. beef producer, comes two days after Beef Products Inc., the largest producer of the filler that is formally known in the industry as lean finely textured beef (FTB), shut down three of four plants that produce it meat, following a campaign against it by consumer activists.
The meat industry and some state governors are fighting back claiming the product is safe. The governor of Iowa called the controversy a smear campaign that should be countered.
The consumer backlash caused a 1 percent drop in Chicago Mercantile Exchange cattle futures on Wednesday as investors feared overall beef sales would be hurt.
Any significant pullback in beef sales would come at a time when beef companies are gearing up for the spring grilling season, which is expected to kick off sooner than usual due to this year's unseasonably mild weather.
"Some Cargill customers have eliminated FTB from their products. Some Cargill fresh beef customers have asked us to provide ground beef without FTB," said Mike Martin, a spokesperson for Cargill, in an email to Reuters.
BPI's product is treated with ammonium hydroxide to kill harmful pathogens like E.coli.
Cargill uses citric acid for the same purpose, which Martin said was approved by the U.S. Agriculture Department as a processing aid for meat.
While Cargill has been scaling back production of the filler, Martin said "we are not suspending FTB production."
Four of five Cargill's plants -- two in Texas, one in Kansas and one in Nebraska -- that process cattle into beef produced the filler beef.
On Tuesday, Jim Lochner, chief operating officer at beef producer Tyson Foods Inc, said publicity surrounding the beef filler had hurt demand for ground beef.
MEAT INDUSTRY FIGHTS BACK
Supporters of the U.S. meat industry are fighting back to slow what they called a smear campaign by consumer activists seeking a ban on "pink slime'-- a term coined by former U.S. government scientist and whistleblower Gerald Zirnstein.
In a bid to counter the negative image of the product, Iowa Governor Terry Branstad will accompany fellow Republican governors Sam Brownback of Kansas and Rick Perry of Texas on a tour of a Beef Products Inc plant in South Sioux City, Nebraska, on Thursday.
"They've been a victim of a smear campaign, and I think we need to all we can to try to counter this," Branstad was quoted by his spokesman as saying.
The beef industry was caught off guard by the campaign against the product, which started after celebrity chef Jamie Oliver devoted a television show to deriding the filler last April.
Responding to consumer pressure, McDonald's last August stopped putting the textured beef in hamburgers, followed by some other fast food companies.
The beef industry says the product is 98 percent lean meat and the USDA says that it is safe. But images of an unsightly glob of filler, which have circulated on the Internet, have left a negative impression with some consumers.
Last week, the Agriculture Department said school districts will be able to opt out of using the ammonia-treated beef filler in school lunch programs.
The department, which purchases about one-fifth of the food served in U.S. schools, said it was responding to calls from districts to be given more choices in purchases of ground beef products. It said it only bought products for the school lunch program that were safe, nutritious and affordable, including those containing the filler.
After the USDA announcement, the nation's top three supermarket chains -- Kroger Co, Safeway Inc and Supervalu Inc all said they would no longer sell hamburger containing the product. Walmart, the nation's largest food seller, said it would no longer use the product in its trays of hamburger.
Beef Products said suspending production at the three plants will cost 650 jobs in Texas, Kansas and Iowa.